Politically wired company reneges on job creation

Edward Ericson Jr., additional reporting by Joe MacLeod

The mayor-to-be all but swooned as the city sold a piece of property worth $70,000 to a politically connected company for $30,121. “It’s hard for me to contain my excitement when I see a project like this,” then City Council President Stephanie Rawlings-Blake said during the Feb. 21, 2007, meeting of the city’s Board of Estimates, according to a contemporary account in Baltimore Business Journal. “By choosing to work on an incubator to develop businesses, you’re really creating a very strong legacy.”

Rawlings-Blake was complimenting Stanley W. Tucker, CEO of Meridian Management Group (MMG), on that day five years ago. He was set to spend $2.4 million to erect the “Jonestown Entrepreneurial Center,” he told the board. The building would contain 10,000 square feet and some 35 employees of eight minority-owned business enterprises with government contracts. The Jonestown Entrepreneurial Center would create 15 new jobs each year, as well as a job or two at MMG, which would manage the enterprise as part of its state-funded mission to help small businesses get up and running. He planned to finish it by mid-2009.

This year the City Council has recognized Feb. 18-25 as National Entrepreneurship Week, a time to celebrate and support young businesspeople creating jobs for themselves and others. Anyone looking for the Jonestown Entrepreneurial Center at 6 N. High St., a planned hub of small and minority-owned enterprises will have trouble finding it. The center does not exist. It is a parking lot.

Since 1994, MMG has held a no-bid, $1.3 million state contract to operate the Maryland Small Business Development Finance Authority (“Something Ventured,” Feature, May 3, 2006). MSBDFA is a revolving loan and contract bond fund aimed at small and minority businesses. The fund usually has about $20 million in loans outstanding, state records indicate. On average it loses about $200,000 each year to loan defaults. MMG’s contract is up for renewal this year.

Tucker is a fixture on the political circuit, shelling out for $100 and $200 campaign events regularly, according to campaign-finance reports. He wins accolades for his company’s commitment to helping small and minority-owned businesses. Last fall the Greater Baltimore Committee honored him with its “Presidents Award” at its annual “Bridging the Gap” banquet. “These motivated, successful minority and women entrepreneurs and partners exemplify the kind of private-sector achievement that drives our economy,” GBC President Don Fry told the banquet guests.

But in this case, Tucker’s publicly funded private company was not able to achieve.

Here’s what happened, as the documents tell it. In 2006 the Baltimore Development Corporation (BDC) put out a request for proposals seeking a developer for the cleared land at 6-16 N. High St., in the city’s Jonestown neighborhood, just north of Little Italy. Tucker responded with a promise to build the center through MMG’s land-holding company, CRST LLC, and the BDC accepted his offer. According to the Land Disposition Agreement (LDA) that should have been recorded with the deed when the property was sold to MMG, the 2,816-square-foot lot was appraised at $70,000. The BDC agreed to sell it to Tucker’s company for a bit more than $30,000, but would not close the deal until Tucker showed the capacity to build the facility.

“The [Department of Housing and Community Development] shall not be obligated to make conveyance of the property unless and until Purchaser has evidenced equity and/or adequate mortgage financing . . . to guarantee the purchase of the property and construction of the Improvements,” the LDA says.

This Tucker apparently did, although the deed was not recorded until February 2008. The LDA requires the construction to proceed quickly, with “final construction plans” submitted within 120 days and completion of the building within two years. It also requires Tucker’s company to give the BDC progress reports every 60 days, specifying that the contract would not be voided if the project were delayed by “acts of God or of the public enemy, terrorism, acts of Government, acts of the other party, fires, floods, epidemics” and a host of other things. Not enumerated is any provision for “not having the money,” but it seems likely that this was the delay.

A bond bill introduced in the state legislature by then Sen. George Della (D-Baltimore City) in January 2007 asked for $750,000 taxpayer dollars for the project. A similar bill appeared in 2008, sponsored by Sen. Nathaniel McFadden (D-Baltimore City), saying the state money was to be matched by a “private investment” of $702,000. The project’s scope by then appeared even grander than that contemplated by the BDC, with more jobs and several more companies to be crammed into the proposed “Entrepreneur Center.” The 2008 bond bill estimated the land-acquisition costs at $99,000—three times the cash MMG actually paid for the lot. The bond bills were not funded. The project has not been completed, or seemingly even begun.

E-mails and phone messages left for Stanley Tucker at MMG beginning on Feb. 6 brought a last-minute response from Levi Rabinovitz of Redzone News Management, a public relations consultant. He asked City Paper to extend its deadline: “I’m just catching up on this,” he said on Feb 16. “Tomorrow is a short day for me.”

City politicians have little to say about the deal or the stalled project. Efforts to get Rawlings-Blake to comment on the situation over two weeks failed. Her spokesman, Ryan O’Doherty, did not acknowledge City Paper’s e-mails and phone calls seeking her thoughts on the matter. He did forward a request for documents to the Baltimore Development Corporation, which supplied the Land Disposition Agreement to City Paper. The LDA seems to indicate that the city could take the property back, but an e-mail from BDC President Jay Brodie defended the city’s decision to leave it in MMG’s hands. The e-mail reads, in part:

The proposed “Jonestown Entrepreneurial Center” expansion has not occurred as planned in 2007 but we are hopeful that business incubator will proceed as planned in the future. Unfortunately, the timing of the City’s approvals and the performance timeline outlined the LDA coincided with the decline and eventual collapse of the real estate and financial markets. The Baltimore Development Corporation has kept an open dialogue with MMG and the Jonestown business community about [the] stalled project. While discussed and reviewed by the City at various times over the past several years, the City did not think it was in its best interest to exercise our reversionary rights in this instance. We are hopeful that the project will proceed as planned, as well as other redevelopment projects in Jonestown.

The LDA contained a provision that required MMG to have project financing lined up before the land could change hands. BDC has not responded to City Paper’s questions regarding the specifics of MMG’s financing arrangements before the financial collapse of 2008.

Brodie’s e-mail adds, “MMG has a long history of raising equity and capital as part of their business model. In addition, they had successfully completed renovations of their Jonestown property in the past. They also shared design plans for their business expansion and continue to evolve them as lending and constructions [sic] standards have changed over time.”

City Council President Bernard C. “Jack” Young (D), who represented the 12th District when the deal was forged, was closed-mouthed about the failed project. The land sale never came before the City Council, he explained on Feb. 8, and “the economy changed.”

Tucker gave Young’s political campaign $1,000 less than a week after the BOE approved the land transfer in 2007, campaign-finance records show. It was one of the largest single political contributions Tucker made that decade.

When City Paper e-mailed Young’s spokesperson, Lester Davis, to ask Young to comment further based on the campaign contribution and the LDA, Davis called back immediately, but not to answer questions or offer perspective on Tucker’s land deal.

“Let me ask you something: What is your position at City Paper?” he said. “Are you a reporter, or an editorial writer? What you sound like is a crusader.”

Carl Stokes, who took over the 12th District Council seat after Young became Council president in 2010 and has been critical of sweetheart development deals as chairman of the Council’s Taxation, Finance and Economic Development Committee, reviewed the LDA on Feb. 16. “For once, I agree with Jay Brodie,” he said. “I did call Stanley Tucker and he said unfortunately because of the economic collapse they were not able to complete the project. They would still like to do the project—there is a great need for it.”

In the meantime, the would-be Entrepreneurial Center is serving as convenient parking for MMG. The lot crosses the back of MMG’s East Baltimore Street office building. A sign overlooking the lot warns, private parking for crst & mmg employees only. by permit only. all others will be towed.